BERLIN (AP) - Leaders of Chancellor Angela Merkel's ''grand coalition'' on Tuesday thrashed out a compromise on labor-market reform that fell short of the center-left Social Democrats' demands for an overall minimum wage and highlighted tensions in the left-right alliance.
Top officials from Merkel's conservative Christian Democratic Union and the Social Democrats met into the early hours of the morning in an attempt to resolve the minimum wage dispute, which had festered for weeks- weighing on the atmosphere in the already fractious coalition.
They agreed to extend a de-facto minimum wage arrangement from the construction industry to several other sectors, but Merkel's party refused to cede to calls for an overall mandatory minimum wage.
Merkel said the coalition leaders had made decisions ''that are good for the people of our country.''
Social Democratic Vice Chancellor Franz Muentefering, who is also Merkel's labor minister, was less impressed.
''We did not reach an agreement on a minimum wage,'' he said. ''The lesson to learn is that we cannot create a minimum wage with the CDU and thus we will have to push it through against their will.''
That appeared to set the scene for the issue to figure in the campaign for Germany's next election, expected in 2009, when the coalition partners are keen to split up.
The Social Democrats have been pushing for a minimum wage amid persistently poor poll ratings, as they struggle to energize their traditional left-wing supporters and compete with the new Left party.
Both The Left and the Social Democrats' traditional labor union allies, enthusiastic supporters of a minimum wage, greeted the compromise with withering criticism.
''This is not a great success - it's a tiny little compromise,'' said Michael Sommer, the head of the German Federation of Labor Unions. ''We will continue to fight.''
''Definitely nothing will change for at least 2.5 million recipients of salaries that are on the poverty level,'' said Harald Werner, a senior member of The Left.
Details of how the deal would work were fuzzy, and it still requires parliamentary approval.
Social Democrat chairman Kurt Beck said it allowed for 10 to 12 further sectors to be included in a law under which wage agreements between unions and some employers in a sector are made legally binding for all firms in that sector - creating a de facto minimum wage for an industry.
The law is currently valid in the construction sector and is soon to be applied to building cleaners.
Muentefering said that night guards, garbage collectors and postal employees were among professions that might now be included, but details still have to be worked out.
In the construction sector, workers earn around $13 per hour, depending on the region. No figures were agreed upon for other sectors.
The two sides reached an agreement on nursing care costs for Germany's aging population.
Starting on July 1, 2008, compulsory long-term nursing care payments made by both employers and employees will be increased by 0.25 percentage points to 1.95 percent of a person's wage.
As a counterbalance, unemployment insurance payments will be reduced by 0.3 percentage points.